Energy Efficiency: Markets or Mandates?The Sallan Foundation, September 1, 2014
Implementation of Energy Efficiency* in the US Building Sector
The implementation of energy efficiency savings in the US has been more difficult than its advocates might have hoped. Americans are relying on a patchwork system to achieve energy savings. That patchwork is derived from local, state and federal government regulations and from market forces. On the local front, there are as many as five actors: local governments, local utilities, local energy service providers, local financing programs and a panoply of local building codes. At the national level, the federal government uses frequently changing tax code provisions and various user standards. Market forces include confusing utility pricing regimes, Energy Service Companies (ESCOs) and a variety of financing mechanisms. The result is that there is enormous confusion in the marketplace about how and where to stimulate more widespread adoption of energy efficiency. Other countries have eliminated such confusion by relying more heavily on unified regulation, with far better results.
We Are Doing Some Things Right
In spite of these fragmented efforts, there are hopeful signs that Americans are beginning to use less electricity overall. US electricity demand growth has fallen off in the last decade and absolute volume of electricity sales has declined since its peak in 2007 (Nadel & Young, 2014). The Energy Information Agency predicts that US electricity use will stay below 2005 levels for the foreseeable future (EIA, 2014) due in part to such factors as the 2008 recession and a decrease in manufacturing, but there are other, more affirmative, factors at play, too. Normally electrical consumption curves and GDP follow a similar curve. However, even as GDP has been increasing in recent years, electricity consumption has been declining.